Mass. Contractor Pleads Guilty in Fraud Scheme

A Maynard, Massachusetts, contractor has pleaded guilty to defrauding seven cities and towns and failing to pay approximately $800,000 in prevailing wages to predominantly immigrant workers, Attorney General Tom Reilly announced.

Milton Marder, 51, pleaded guilty recently in Essex Superior Court to 12 counts of larceny, conspiracy and prevailing wage violations, including: two counts of larceny, five counts of conspiracy, two counts of intentional non-payment of prevailing wages, two counts of failing to submit true and accurate payroll records, and one count of failing to register and pay unemployment insurance. He will be sentenced on Feb. 1, 2005.

Marder obtained sub-contracts on several taxpayer-funded projects throughout Massachusetts beginning in 1997. He pleaded guilty to violations which reportedly occurred on seven public construction projects from 2000 – 2002, including:

Holliston High School
Erving Elementary School
Brockton Housing Authority Roosevelt Heights Modernization Project
Brookline Public Library Renovations
Bridgewater State College Harrington Hall Renovations
Hull Memorial Memorial Middle School
Norwell’s Cole Elementary School

AG Reilly’s Office began investigating Marder’s business practices in August 2001 after his Office received complaints from multiple employees who had been been performing demolition work as part of the construction of the new Holliston High School. Marder’s workers were reportedly paid between $10-$12 per hour, which was far below the statutorily-mandated minimum prevailing wage rate of $26.65 per hour.

Many of Marder’s former employees were recent Brazilian immigrants. These workers filed complaints with the Brazilian Immigrant Center in Brighton, which then referred the complaints to AG Reilly’s Fair Labor and Business Practices Division. The Attorney General’s investigators were reportedly able to identify more than 150 employees who were repeatedly underpaid for their work on the seven public projects.

Investigators reviewed and analyzed thousands of pages of financial records and payroll information. Many of the employees were unskilled laborers with limited English language skills. Several were unaware of their right to be paid the minimum prevailing wage.

AG Reilly’s investigation revealed that Marder reportedly concealed his crimes by designating his employees as corporate officers and by submitting fraudulent payroll records to the communities in which he worked. Relying on Marder’s companies’ certifications, the cities and towns paid them more than $1.1 million. Employees were underpaid more than $800,000. Marder knowingly failed to report and register employees with the Massachusetts Division of Employment and Training, thereby avoiding paying proper unemployment insurance.

The companies through which Marder worked on the public projects were: Detail Services Corporation of Las Vegas, Nev. and Andover, Mass; New England Building Services Corporation of Las Vegas and Methuen, Mass; and National Building Services Corporation of Las Vegas and Quincy, Mass.

Marder faces additional charges for wire fraud and bankruptcy fraud in a related prosecution by the New Hampshire United States Attorney’s office. He will be formally sentenced in that case on Jan. 28, 2005.

Massachusetts Prevailing Wage law requires contractors on public construction projects to pay workers a special minimum prevailing wage rate set by the Commonwealth of Massachusetts. Contractors who accept tax payer funds on these projects must promise to pay their workers at least the minimum prevailing wage rate. Each week, the contractors must certify that they are complying with the law.